Preferreds drop with market; Citigroup preps dividend on series Cs; Fannie, Freddie slide

By Stephanie N. Rotondo

Phoenix, Oct. 7 – Preferred stocks were coming in Tuesday as the broader equity market was showing a triple-digit loss.

The equities’ decline was due in part to signs that Europe’s economy was slowing down.

“Treasuries are up on weak markets worldwide,” one trader noted, adding that there was “just nothing going on in the preferred world.”

Still, the preferred space held up better than the broader markets.

The Wells Fargo Hybrid and Preferred Securities index ended the day down 4 basis points. The index was off 7 bps at mid-morning.

Citigroup Inc.’s 5.8% series C noncumulative preferreds (NYSE: CPC) are slated to go ex-dividend on Wednesday, as holders receive 36.25 cents per share for their quarterly dividend.

The shares were initially trading off 9 cents to $23.78 early Tuesday but closed up 2 cents at $23.89.

In other dividend news, International Shipholding Corp. recently declared dividends on both the 9.5% series A cumulative redeemable perpetual preferreds (NYSE: ISHPA) and the 9% series B cumulative redeemable perpetual preferreds (NYSE: ISHPB).

Series A holders will receive $2.375 per share, and the series B holders will get $2.25 per share on Oct. 30.

Both issues are $100-par paper.

In Tuesday trading, the series A shares were up a dollar at $104.50. The series Bs were down 34 cents at $101.65.

Fannie, Freddie eyed

A trader said that investors were still trying to “make heads or tails of Freddie Mac and Fannie Mae” following last week’s news that a federal judge had slapped down investors’ lawsuits regarding allegations the government’s takeover of a majority of the agencies’ profits was illegal.

When the news came Sept. 30, Freddie and Fannie preferreds took a dive, a trend that continued until Friday, when the shares attempted to recoup some loses.

But as the new week began, the preferreds were declining yet again.

In Tuesday trading, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) declined 35 cents, or 9.33%, to $3.40 and Freddie’s fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) dropped 24 cents, or 6.38%, to trade at $3.52.

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